Should tax policy encourage two-parent families?

“The problem of poverty is linked to family breakdown and the erosion of marriage among low-income families and communities.”

Those are the words of Utah Senator Mike Lee in a speech to the Heritage Foundation.

Lee is careful not to cast opprobrium on single or divorced parents. But he insists on pointing to the uncomfortable but undeniable fact that economic outcomes for their children have been far worse than those of children raised in two-parent families.

That produces many personal tragedies. And in cold economic terms, it means that society is losing gross domestic product because of less than optimal development of human capital.

Government policy can’t force people to get or stay married. But it may be able to encourage them to do so.

That happened in the years after World War II. A steeply progressive income tax combined with generous dependent deductions ($500 originally, later raised to $600) played some unquantifiable part in stimulating the Baby Boom and family stability for a generation after the war.

Over the years, more tax policies have been implemented to encourage retirement savings, home ownership, energy savings, and other behaviors. In addition, a profusion of tax incentives exist on a corporate level. Would tax incentives actually work in encouraging parents to marry?

Lee proposes a $2,500 child tax credit — less in real dollars than the postwar deduction — applied to both payroll and income taxes.

He also proposes allowing employees to claim flex time when they have worked overtime, as federal employees can do. He wants Congress to hack away at the marriage penalties embedded in various benefits programs and Obamacare.

Would it work?

While I am a strong advocate of two-parent families, I’m not convinced these proposed changes would encourage marriage. Additionally, with the tax code already burdened by complicated rules and regulations that often promote inequity, I tend to favor simplifying the process. Social engineering through government intervention has too many unintended consequences for me to place much faith in ideas like Lee’s.